Void Contracts

A void or inexistent contract is one which has no force and effect from
the very beginning. Hence, it is as if it has never been entered into
and cannot be validated either by the passage of time or by
ratification. There are two types of void contracts:
(1) those where one of the essential requisites of a valid contract as
provided for by Article 1318
(2) those declared to be so under Article 1409
Article 1318. There is no contract
unless the following requisites
concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
 Real Contracts
Require a fourth requisite which is delivery

Solemn or Formal Contracts

Require a fourth requisite which is compliance with the
formalities required by law ( example: donation inter vivos of land
that requires a public instrument for its perfection)
Article 1409. The following contracts are inexistent and void from
the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy;
Laws that may substantially change contract stipulations will not retroactively affect existing contracts (THE 1987
CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES ARTICLE III, Sec 10)
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
It must be in existence or capable of coming into existence
(4) Those whose object is outside the commerce of men;
Article 1347 - The thing must be within the commerce of men, that is, it can legally be the subject of commercial transaction
(5) Those which contemplate an impossible service;
Article 1348 - It must not be impossible, legally or physically
(6) Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;
Article 1378 -If the doubt refers to the principal object of the contract and such doubt cannot be resolved, thereby leaving
the intention of the parties unknown, the contract shall be null and void.
(7) Those expressly prohibited or declared void by law
These contracts cannot be ratified. Neither can the right to set up the defense be waived
Characteristics of Void
Contracts
1. The right to set up the defense of illegality cannot be waived (Art. 1409, Civil
Code), and may be considered on appeal even if not raised in the trial court.
(Garrido v. Perez Cardenas, 60 Phil. 964).
2. The action or defense for their declaration as inexistent does not prescribe.
(Art. 1410, Civil Code).
3. The defense of illegality of contracts is not available to third persons whose
interests are not directly affected. (Art. 1421, Civil Code).
Its invalidity can only be questioned by those affected by it.
4. Cannot give rise to a contract; thus a contract which is the direct result of a
previous illegal contract is also void and inexistent. (Art. 1422, Civil Code).
5. Generally, it produces no effect whatsoever and no action to declare
them void is needed, since they are inexistent from the very beginning.
Though, for the sake of convenience, it may be declared void, but a judgment of
nullity would be merely declaratory.
Even when the contract is void or inexistent, an action is necessary to declare its
inexistence, when it has already been fulfilled. Nobody can take the law into his
own hands.
The intervention of a competent court is necessary to declare the absolute nullity
of the contract and to decree the restitution of what has been given under it.
The judgment of nullity will retroact to the very day when the contract was entered
into.
6. It cannot be cured or validated either by time or ratification (Art. 1409
Classification of void contracts
The inexistent
Lacks essential requisites or formal requisites
The illegal or illicit
Those contrary or prohibited by law
Example contract to kill
Article 1416 - those prohibited by the constitution
Non-Existing Cause or Object
[Paras]
Paragraph 3 speaks of contracts whose object or cause did not exist
at the time of the transaction. This is not exactly correct because
there can be valid contracts involving future property; example, sale
of future or after-acquired property. Thus, Mr. Justice J. B. L. Reyes
notes: Did not exist at the time of thetransaction should be Could
not come intoexistence because the object may legally be a future
thing.
 What are the kinds of simulation of contract?
1. Absolute the contracting parties do not intend to be bound by the
contract at all, thus the contract is void.
2. Relative the real transaction is hidden; the contracting parties
conceal their true agreement; binds the parties to their real agreement
when it does not prejudice third persons or is not intended for any
purpose contrary to law, morals, etc. If the concealed contract is lawful,
it is absolutely enforceable, provided it has all the essential requisites:
consent, object, and cause. As to third persons without notice, the
apparent contract is valid for purposes beneficial to them.
Prohibited Contracts
Example:
Article 1491
The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through
the mediation of another
(1)The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the
property whose administration or sale may have been intrusted to them, unless the consent of the principal has
been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers
and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled
corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to
judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges,
prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the
administration of justice, the property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession; (6) Any others specially disqualified by law
 Prohibited Contracts
Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.
(Article XII, Section 7)
1. Filipino citizens.
2. Corporations at least 60% of the capital of which is owned by Filipinos.
In other words, the Constitution explicitly prohibits non-Filipinos from
acquiring or holding title to private lands. Among the exceptions are as
follows: (1) transfer to an alien by way of legal succession; or (2) if the
acquisition was made by a former natural-born citizen. he 1987
Constitution provides that:
Notwithstanding the provisions of Section 7 of this Article, a natural-born
citizen of the Philippines who has lost his Philippine citizenship may be a
transferee of private lands, subject to limitations provided by law. (Art. XII,
Sec. 8)
Article 1416
When the agreement is not illegal per se but is merely
prohibited, and the prohibition by the law is designed for the
protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has paid or delivered.
Article 1416 is an exception to the rule that where both parties are
in pari delicto, they will be left where they are without relief.
Recovery is permitted provided:
(1) The agreement is not illegal per se but is merely prohibited;
(2) The prohibition is designed for the protection of the plaintiff; and
(3) Public policy would be enhanced by allowing the plaintiff to
recover what he has paid or delivered.